St. Joe To Let Go Of Conglomerate

Spinoff Keeps Major Focus On Real Estate

For a current St. Joe Co. stock quote, company profile, broker reports and SEC filings, go to orlandosentinel.com/business

Sharpening its focus on real estate, Jacksonville-based St. Joe Co. said Wednesday that it plans to spin off its majority interest in Florida East Coast Industries to St. Joe shareholders.

Florida East Coast, based in St. Augustine, operates a railway and a trucking company, develops real estate through its Gran Central Corp. subsidiary and owns an Orlando-based company - FEC Telecom - that leases fiber-optic lines to telecommunications companies.

The spinoff would be one of the final steps in St. Joe's transformation from an agriculture and manufacturing conglomerate to a pure real estate company with more than 1 million acres throughout the state.

During the past four years, St. Joe has disposed of its sugar operations in South Florida and its paper mill and box-manufacturing plants in the Panhandle. Among its remaining non-real estate holdings is a small railroad in the Panhandle.

Former Walt Disney Co. executive Peter Rummell was hired to preside over the transformation, taking the corporate reins in early 1997.

Rummell said Wednesday that the latest move will benefit St. Joe shareholders and further concentrate the company's operations on real estate.

Much of St. Joe's current development is in the Panhandle, where most of its land holdings are located. But the company has a significant presence in Central Florida. It is developing the 750,000-square-foot Legacy Point office park in southwest Orlando and the 335,000-square-foot CNL Center in downtown Orlando. Both are joint ventures with The CNL Group of Orlando.

St. Joe is also managing and developing Gran Park at SouthPark in south Orlando, an 850,000-square-foot business park, on behalf of Gran Central. Arvida, St. Joe's residential arm, is planning a 1,859-acre mixed-use community, Victoria Park, near DeLand in southwest Volusia County.

Under the proposed spinoff, St. Joe's 54 percent stake in Florida East Coast would be exchanged for an equivalent number of shares of a new class of Florida East Coast stock, which would then be distributed to St. Joe shareholders. The change would occur next spring, pending Internal Revenue Service approval of the deal as a tax-free exchange.

The spinoff agreement provides St. Joe opportunities to participate in Florida East Coast's Gran Central real estate operations. St. Joe manages Gran Central's 6 million square feet of commercial space throughout the state and is helping develop several million more square feet on Gran Central property. St. Joe would continue to manage and develop those properties for three years - an arrangement that could be extended.

Further, St. Joe and Gran Central would form a development joint venture, both contributing land to the enterprise for future projects.

In addition to properties already in place or under development, Gran Central owns more than 18,000 undeveloped acres, mostly along Florida's east coast. The holdings include some prime locations in Fort Lauderdale and Miami.

St. Joe developed from the dream of Alfred I. duPont, who came to Florida in 1927 to build a business empire. DuPont died in 1935, but his son-in-law, the late Edward Ball, continued the empire building.

The business grew to encompass everything from forests, paper mills and manufacturing plants to sugar farms, banks and the railroad.

When the railroad was spun off as a public company, the Alfred I. duPont Testamentary Trust remained the majority owner through its majority ownership of St. Joe.

After the spinoff, the trust would remain the largest single shareholder in Florida East Coast.